AIG’s gratitude comes with fine print

One of the more infamous bailouts from the 2008 crash was the rescue of AIG, which saw its reputation severely tarnished during the crisis. With AIG now back on its feet, the insurance giant is spending a fair amount of money on an advertising campaign, running ads like these thanking America for saving the multi-billion dollar company.

There is, however, a little detail that the ad campaign doesn’t mention: AIG is considering a lawsuit against the same United States government that saved it from collapse.

Behind the scenes, the restored insurance company is weighing whether to tell the government agencies that rescued it during the financial crisis: thanks, but you cheated our shareholders.

The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue – the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients – deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”

There are financial experts who can speak with more authority than I about the merits of the case. But at least on the surface, if AIG is concerned about its standing with the public, suing the United States because the insurer isn’t satisfied with the way in which the government rescued the company probably isn’t a great strategy.

Indeed, had it not been for the bailout AIG now sees as overly onerous, there wouldn’t be an AIG to file a lawsuit at all.

Readers more familiar with finance litigation are invited to weigh in below, but from a distance, it appears AIG is pushing its luck. As Matt Yglesias added, “Common sense says that absent the bailout, AIG shareholders would have nothing at all today so they don’t get to complain that they end up with less than they might have gotten under some alternate bailout. But obviously the law doesn’t always follow common sense so I can’t entirely exclude the possibility that there’s a real case here.”